London is the most expensive city in Europe and the second most expensive city worldwide in which to build, according to the latest International Construction Costs Index published by Arcadis.

The index reports that opportunism by contractors plus limited bidding resource has driven up construction prices in the capital meaning the cost for the construction of a five star hotel in London is 20% above that in Paris and 50% higher than in Dubai.

Yet despite the increasing costs London remains an attractive market to international investors who, along with strong domestic demand, are driving growth in bidding opportunities.

Demand is though filtering out to sub-prime areas of the capital as prime areas are no longer profitable to build on.

The Index from Arcadis analyses the relative costs of construction across 44 major cities and has ranked New York as the world’s most expensive place to build closely followed by London, while Bangalore and Taipei are the cheapest.

Meanwhile, the National Audit Office (NAO) has expressed concern that a third of major government projects due to be delivered in the next five years are rated as being in doubt or unachievable if action is not taken to improve delivery.

There were 149 projects as of June 2015 in the Government Major Project Portfolio with a combined whole-life cost of £511 billion. They include schemes such as Crossrail and HS2.

In its progress report on measures to improve delivery of major government projects the NAO said that there had been initiatives designed to improve the oversight and delivery of projects, but their impact was unclear.

The NAO added that there is still a “disappointing” lack of progress in the improvement of portfolio management with no single organization having a whole view of the entire portfolio of government projects, an inconsistency in the reporting of costs and no proper monitoring of whether the intended benefits of the projects were achieved.

These issues the NAO said made it “difficult to tell whether performance was improving without reliable and consistent measures of project success”.

At the beginning of this year, the Major Projects Authority and the Infrastructure UK merged to form the Infrastructure and Projects Authority to provide independent assurance on major projects such has Crossrail.